JUBA May 31 Longhorn cattle are the traditional
measure of wealth in South Sudan but the preoccupation these
days in the capital Juba is with a hornless green-backed beast,
preferably in mint condition, no blemishes on its watermarked
hide and no more than six years old.
Ask shoppers in Juba's bustling markets why prices in South
Sudanese Pounds of everything from charcoal to meat and onions
have gone through the roof since the start of the year and they
will say: "It's the dollars". The lack of them, that is.
A harsh U.S. dollar famine is squeezing the world's newest
nation, born last July. It struck after the former rebels who
run the infant African state closed down oil production from
January, effectively shutting off 98 percent of state revenues.
Friends, allies and donors called them mad. But South
Sudanese leaders said they had no choice to stop arch-enemy
Sudan from "stealing" their crude in a fight over borders and
oil transit fees - the pipelines traverse Sudan.
Tensions remain raw between the south and the north, who
fought Africa's longest civil war before a peace deal in 2005.
"The injection of dollars has been reduced from around $200
million a month to $40-50 million," Deputy Finance Minister
Marial Awou Yol told Reuters. "We are still at war."
Even before the crunch, South Sudan was struggling to raise
health and education levels among the worst in the world in a
sprawling nation with very few tarmac roads and a diverse 8.6
million population of mostly rural cattle herders and farmers.
The foreign currency choke-off has sent the black market
rate for the South Sudanese Pound to near 5 against the
dollar, from 3.55 when the crude was still flowing.
This is throttling businesses from contractors to
restaurants and supermarkets which have to import almost
everything in dollars to a country that has oil underground and
millions of cattle above it, but precious little else.
Nudged by the United Nations and China, the main investor in
both oil-reliant states, Sudan and South Sudan have resumed
talks on their disputes, and many hope an eventual deal can turn
the oil taps in the south back on soon.
With the dearth of greenbacks, visitors may be surprised to
find their proffered dollar bills being scrutinised by waiters,
drivers and hotel staff with all the suspicion of a Las Vegas
cashier sniffing out a counterfeit.
Sorry, can't take that one, there's an ink stain, nor that
one, too scuffed and dirty. Oh, and we don't accept any U.S.
notes older than 2006, so sorry, 2004 won't do and you can
forget about 1991. Crisp "Benjamins", the 100 dollar bills that
carry the image of U.S. founding father Benjamin Franklin, are
the preferred species.
"The banks won't accept the others," is the apologetic
explanation given. "We can't take them, because none of our
customers will take them," the executive of one foreign bank in
Juba, who asked not to be named, told Reuters.
HUMMERS AND "TUKULS"
This pecuniary pickiness developed a few years ago, the
executive said, even before South Sudan gained independence in
July 2011. It is now a practice observed by everyone.
South Sudanese Pound notes, many of them now coated in grime
or handed over in humid wads, face no such scrutiny.
It is one of several startling features in a nation
literally under construction. The capital, Juba, is a chaotic
mix of building site and refugee camp, with some paved streets
and a labyrinth of dirt roads.
Inequality feeds on poverty, so you will find shiny Hummers
and Toyota Land Cruisers parked outside humble "tukuls", the
pointy-roof thatch-and-mud huts that dot the rural landscape.
Mirroring the dollar drain, many Juba petrol stations
periodically run dry as fuel supplies trucked from Kenya falter
- or are diverted to the black market. Vendors sell plastic
bottles of gasoline by the road, like some exotic pink liquor.
Facing dire warnings from the World Bank and donors that the
economy risks a dramatic collapse in GDP, South Sudan's
governing Sudan People's Liberation Movement (SPLM) has drawn up
an austerity budget that slashes costs by 30-40 percent.
Defense and security still have a lion's share. The
government says it will prioritise education, health and
infrastructure but the financing gap is clearly huge.
"Even God can't turn 2 percent into 98 percent!" lamented
one government insider, commenting on the oil revenue shut-off.
Seeking bridging loans and emergency budget support from
sympathetic states, South Sudan's rebel-commander-turned
president Salva Kiir has travelled to China and South Africa in
recent months, and ministers have been on similar missions.
Deputy Finance Minister Yol says a $100 million Qatari loan
is helping fund essential imports of food, fuel and medicines. A
further $250 million line of credit is being negotiated with a
"bank in the Middle East".
Another bank in the same region could provide $500 million
of project finance, Yol said.
Soon after Kiir visited Beijing, Juba officials said China
had offered $8 billion for development projects. But Chinese
officials have not clarified the offer and it seems clear most
of this will not be available immediately.
Obtaining definitive financial figures for the newborn
nation sometimes seems as difficult as pursuing a lost cow in
the vast Sudd swamp that straddles the White Nile.
One senior SPLM official said the country had enough hard
currency reserves to last "more than a year'. Deputy minister
Yol saw them lasting "up to around October, December".
Earlier this month, Central Bank governor Kornelio Koryom
Mayiik told a reporter the reserves were "in the region of $1.5
billion". A Juba-based development expert, who asked not to be
named, put them "in the region of $500 million" and said the
government was "buying a month at a time".
SPLM leaders put a brave face on South Sudan's capacity to
survive without oil revenues. "I am very optimistic that we are
not going to die with our oil beneath our feet," Yol said.
Citizens hope hardship will be short-lived: "God willing,
the oil will resume again," said Abuk Dut, 20, a student.